THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

 

 

 

 

SENATE

 

 

 

 

 

WORKPLACE RELATIONS (GUARANTEEING PAID MATERNITY LEAVE) AMENDMENT BILL 2007

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Workplace Relations (Guaranteeing Paid Maternity Leave) Amendment Bill 2007

 

Explanatory Memorandum

 

Circulated by authority of Senator Natasha Stott Despoja

 

GENERAL OUTLINE: Policy Rationale

 

This Bill amends the Workplace Relations Act 1996 and builds upon the existing provisions for unpaid parental leave, to provide for a system of paid maternity leave that will assist all eligible Australian working women who take time off from their employment upon the birth of a child.

 

The Bill provides for 14 weeks Government-funded paid leave at or around the birth or adoption of a child for all eligible Australian working women, at the level of the minimum wage, or if they earn less than this (eg. part-time or casual workers), at their average wage, with a guaranteed income and a right to return to work at the end of it.

 

This Bill aims to provide a system of paid maternity leave for Australia’s working women, meeting a serious gap currently in our system of workplace practices.

 

This Bill also ensures that women’s labour force participation is recognised and provides a guarantee for women to return to the workforce, something the Baby Bonus fails to address.

 

FINANCIAL IMPACT:

 

Based on a series of reasonable assumptions about labour market patterns, it is estimated that the proposal contained in this Bill will cost in the vicinity of $591.6 million in the first year of operation. This assumes that the payment is taxable and that women who receive this new Payment will remain eligible for the existing Baby Bonus and Maternity Immunisation Allowance (with estimated costs to the government of $1.3 Billion and $59.3 million respectively in 2007-08)[1].

 

This costing is an approximation.  Its validity depends upon how many women actually claim the payment, their levels of wage income in the preceding year, and the effects of the introduction on women’s labour market participation.

 

The calculation is based on the following factors. In 2005 there were 255,481 confinements of women resulting in the live birth of at least one child[2]. There were a further 481 inter-country and local adoptions in Australia in 2005-06[3]. We know from a recent ABS survey that 63 per cent of recent mothers (those with children under two) worked during their last pregnancy[4]. Of these, however, 20 per cent were employed in the public sector (government bodies and departments) and thus are ineligible[5]. We also know that 17 per cent of recent mothers were employed for less than 12 months in the job they held while pregnant meaning they are ineligible for this payment[6].

 

The actual incomes of mothers prior to their children’s births are not known though, so estimates have been created from information on the income distribution of all women. Using published data from the ABS we know that in May 2006 approximately 37 per cent of all women earned less than the minimum wage. Using a pro rata formula to roughly estimate the average income of women earning below the minimum wage arrives at a median of $269 per week in May 2006.[7] This $269 has been further increased to an estimated $280 per week by accounting for increases in women’s total average earnings between May 2006 and May 2007[8]. As a rough calculation we therefore assume that 37 per cent of all eligible women will receive $280 per week on average, and the remainder receive the maximum payment of the minimum wage ($522.12 per week as at October 2007).

 

The calculation is thus:

 

255,481 confinements and 481 adoptions (255,962 maternity events) x 0.63 participation rate = 161,256

 

x 0.80 in non-government employment ( = 129,005)

 

x 0.83 for those in current job for more than a year = 107,074

 

Of these, assume 36.8 per cent (or 39,403) earn less than minimum wage at an average of $280/week. These are eligible for an average payment of ($280 x 14 weeks) = $3913. The estimated cost (before tax) for those earning less than minimum wage is $3913 x 39,403 = $154.2 million.

 

For those earning above minimum wage, or 63.2 percent of 107,074 = 67,671 ($522.12 x 14 weeks) = $7310. The estimated cost (before tax) for those earning less than minimum wage is $7310 x 67,671 = $494.7 million.

TOTAL APPROXIMATE COST, BEFORE TAX = ($154.2m + $494.7m) = $648.9 million

 

Assuming that those paid $522.12 a week pay tax (including the Medicare Levy and Low Income Rebate) at the current rate of $54.51 a week, a sum of around ($54.51 x 14 x 67,671 = ) $51.6 million can expect to be recouped through taxation payments. A further ($10.21 a week x 14 weeks x 39,403 =) $5.6 million can be expected to be recouped from those earning less than the minimum wage ($280 per week on average). This takes the net cost to the Federal Government to ($648.9 m – $51.6 m – $5.6 m) = TOTAL COST NET OF TAX = $591.6 million.

This figure is an indicative cost to the government if the scheme was in operation for the full 2007-08 year but there are various factors which it is not possible to cost based on currently published information. Most notably, as this payment is considered taxable income, some families will have their Family Tax Benefit payments reduced leading to further savings to the government. Furthermore it is also possible that there could be some savings to government from a reduction in Child Care Benefits and the Child Care Tax Rebate paid to families if they reduce their use of formal child care due to this scheme.

 

HREOC costed a similar model of PML in A Time To Value (which essentially mirrored my original 2002 bill and our costings) at $219 million for last financial year, including the Family Tax Benefit and childcare costs offsets, highlighting the savings to the government.

 

While the current costings do not include the subsequent savings to the government after offsets to the Family Tax Benefit or Childcare, HREOC’s costings emphasise the potential savings that would be achieved under this Bill.

 

 

REGULATION IMPACT STATEMENT

 

Paid maternity leave has been long standing Democrat policy.  In 2002, Senator Stott Despoja introduced Australia’s only paid maternity leave legislation and since then, the party have consistently been at the forefront of calls for the introduction of a PML scheme with no avail. 

 

Support for PML in the workplace is increasingly gaining momentum.  In March this year, Acting Sex Discrimination Commissioner, John Von Doussa reignited calls for immediate action to introduce 14-weeks government funded paid maternity leave.[9]  A recent Newspoll survey showed strong support for paid maternity leave remains on top of the agenda for many Australians, not just for working women, but for their families, who are finding it increasingly more difficult to balance work and family life.[10]

 

According to the Australian Bureau of Statistics, only 37% of women have access to PML across Australia, leaving many women in the private sector, and in small business without any such benefits.

 

In building upon the existing unpaid parental leave provisions in the Workplace Relations Act 1996, the Bill preserves all existing rights to return to work, and ‘piggy-backs’ on existing administrative arrangements.

 

This Bill is a restructured version of Senator Stott Despoja’s 2002 Bill, that takes into account changes to the Workplace Relations Act, and implements many of the recommendations from the Senate inquiry into the original Bill.

 

 

.   NOTES ON CLAUSES

 

Clause 1 – Short title

 

This clause provides for the Act, when it is enacted, to be cited as the Workplace Relations (Guaranteeing Paid Maternity Leave) Amendment Act 2007.

 

Clause 2 – Commencement

 

This clause provides for the commencement of the Act on the day on which it receives the Royal Assent.

 

Clause 3 – Applications

 

This clause ensures that this Act would only apply to an employee who takes leave from her employment in respect of a child, if the child is born on or after 1 September 2007, or in the case of an adoption, the date on which the employee first assumes the care of the child on or after the date of commencement of this Act.

 

Clause 4 – Objects

 

This clause states that the objects of this Bill are principally to give effect, or further effect, to:

·        Article 11.2(b), Convention on the Elimination of All Forms of Violence Against Women, 1979; and

·        The Family Responsibilities Convention; and

·        The Workers with Family Responsibilities Recommendation, 1981, which the General Conference of the ILO adopted on 23 June 1981 and is also known as Recommendation No.165

 

to guarantee government funded paid maternity leave to all working women, whether full-time, part-time or casual.

 

Schedule 1 – Amendment to the Workplace Relations Act 1996

 

Item 1 - At the end of section 265 “guarantee of maternity leave” add:

 

Subsection (5) ensures that eligible employee’s, including adoptive parents, will receive the equivalent of the amount of the Federal Minimum Wage for 14 weeks (currently $511.76 per week, to increase to $522.12 in October) in addition to their salary or wage.

 

Subsection (6) identifies that full time, casual and part-time workers are considered to be eligible employees for the purpose of this Bill.

 

Subsection (7) requires that the amount of paid maternity leave granted to employees will be pro-rata, to ensure that employees that work less than the average hours of a full-time employee are only eligible for the paid maternity leave entitlement in accordance with the hours worked.

 

Subsection (8) allows the employee to claim the paid maternity leave entitlement over 28 weeks, at half the minimum wage.

 

Subsection (9) ensures that the paid maternity leave payment must be made by the Commonwealth to the employer, and then from the employer to the eligible employee.

 

Subsection (10) ensures that no other entitlement that an employee may have under the terms of their employment agreement, award or law, could be affected by the paid maternity leave entitlement.  For example, this would ensure that an employer could not force an employee to forfeit their entitlement to carers leave in place of taking paid maternity leave. 

 

Subsection (11) ensures that Commonwealth, State or Territory government employees, who already have access to paid maternity leave entitlements will not be eligible to receive this PML entitlement. 

 

Subsection (12) recognises the physical demands of the latter stages of pregnancy, by providing for a system of government-funded paid maternity leave.  This subsection also ensures that the PML payment is not a transferable payment between employee and spouse except in exceptional circumstances.  The term “exceptional circumstances”, is exactly that -- meaning circumstances that are unforseen, such as the death of the mother, or the transfer of the child the sole custody of the father to the exclusion of the mother.

 

Subsection (13) ensures that the PML payment is treated as a wage and salary income for the purposes of taxation, superannuation and other laws and agreements.

 

Subsection (14) specifically ensures that any other existing paid maternity leave provisions of enterprise or workplace agreements will not be adversely affected. This subsection also highlights that the paid maternity leave entitlement set up in this Bill will not affect the employee’s entitlement to any related Commonwealth maternity payments, such as the Baby Bonus.

 

Subsection (15) provides for the extension of the workplace paid maternity leave provisions established before the commencement of this section – with the consent of the employer and the employee.

 

 

Item 2 – After section 316 add:

 

Subdivision L – Inquiry and review

 

316A Inquiry into paid maternity leave

 

This subdivision specifically requires the Workplace Relations Minister to direct the Department to hold a public inquiry into the possibility and cost of extending the paid maternity leave entitlement to self employed and farming women.

 

 

316B Review of operation of Division

 

The second aspect of the subdivision requires that by the third anniversary of the commencement of this subdivision the Workplace Relations Minister holds a review into the overall effectiveness of the subdivision, including:

·        The effectiveness of the scheme where employers choose to make voluntary top-ups to employees – in addition to the minimum government paid maternity leave; and

·        An in-depth analysis on the impact of increasing an employee’s payment from the minimum wage to a greater agreed amount.

 

This subdivision also requires that the Workplace Relations Minister tables, in both Houses, a copy of the report of the review within 15 sitting days.

 

Section 316 of the Workplace Relations Act was chosen as the place to insert the inquiry and review subdivision as it is at the end of the Parental Leave Section of the Act.